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Demonstrating advanced practice provider value

Implementing a new advanced practice provider billing algorithm

Brooks, Paula B., DNP, FNP-BC, MBA, RNFA; Fulton, Megan E., MSPAS, PA-C

Journal of the American Academy of PAs: February 2019 - Volume 32 - Issue 2 - p 1–10
doi: 10.1097/01.JAA.0000550293.01522.01
Original Research

Background: Rapid changes in healthcare are driving the adjustment of work flow by which providers serve patients in team-based care. Specifically, there is a need to develop more effective and efficient utilization with accurate attribution of advanced practice providers' (APPs) productivity.

Local problem: The directors of the APP-Best Practice Center conducted assessments of each clinical area at the Medical University of South Carolina (MUSC) Health, a large academic medical center. A knowledge gap was identified, not only regarding billing practices of the APPs (NPs and physician assistants) but also in the use of APPs to practice to the fullest extent of their license, education, and experience.

Methods: By substantiating APPs' contribution margin through the process of implementing a new standardized APP billing algorithm, a change in practice was accepted by senior leadership and a new APP billing algorithm was built that follows updated practice laws, compliance/legal standards, and hospital bylaws and regulations.

Interventions: A new billing algorithm was implemented on July 1, 2017, and outcomes were evaluated 12 months after implementation.

Results: This project uncovered the work already performed by APPs while increasing relative value units, collections, and overall patient encounters by the APP/physician team. Findings suggest improved utilization and appropriate attribution of productivity.

Conclusions: With the APP workforce growing, the implementation of electronic medical record systems, and today's healthcare financial constraints, healthcare systems must standardize their billing practices. The APP billing algorithm is a critical tool that will help to meet this demand.

At the Medical University of South Carolina in Charleston, Paula B. Brooks is director of advanced practice nurses and Megan E. Fulton is director of physician assistant practice. The authors have disclosed no potential conflicts of interest, financial or otherwise.

Acknowledgments: The authors would like to thank MUSC compliance managers, Dixie McMahan, CPC, CPMA, CEMC, and Senior Director Julie Acker; Arthur Ellis, MA, IT senior user adoption specialist; Haylee McBrayer, MHA, solutions consultant for information solutions; Adam Bacik, MHA, senior manager, capacity management; Brian Allenspach, MBA, manager of user adoption and training; and all the advanced practice providers at MUSC.

JAANP and JAAPA have arranged to publish this article simultaneously in their February 2019 issues. Although the two articles may have minor style differences, they are essentially the same.

Advanced practice providers (APPs), specifically advanced practice registered nurses (APRNs) and physician assistants (PAs), have a long and recognized track record of providing cost-effective, quality healthcare services, particularly for patients in greatest need.1–4 Not only do APPs need to be competent clinicians, they also need to be knowledgeable of the financial aspects of providing care. Tracking APP reimbursement is crucial in today's healthcare environment. APRNs and PAs need correct billing and coding skills, a comprehensive understanding of Medicare and other insurances' billing regulations, and an appreciation of the differences in reimbursement policies across all payers.5 They also need to have a strong knowledge base of the differences in inpatient versus outpatient billing guidelines. Reimbursement policies and systems must reflect the true costs of care and promote sustainable practice for APPs.6

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Evidence supports using APPs in the healthcare industry as one of the most cost-effective and achievable improvements to solving the United States' challenges of increased cost, poor quality, and lack of access in healthcare.7,8 When APPs are appropriately optimized, with identifiable clinical and financial outcomes, they can add substantial value to an organization and help improve the health of the community.9–17 Outcomes such as fewer avoidable hospitalizations, readmissions, and ED visits have been shown to improve when APPs are used appropriately in a wide variety of settings.18,19 These practitioners can fill an important gap in our complex healthcare delivery system.

Despite evidence supporting the need to expand the APP role, many barriers to practice still exist at the national, state, and local levels.3,20 Barriers at the national level are highly driven by opposition from some medical organizations that believe APPs are not able to provide quality, safe care at the same level as physicians.21–23 However, a number of long-term studies prove otherwise. A systematic review of 69 studies from 1990 to 2008 clearly shows that, in a variety of situations, NP outcomes in a broad sample that include both inpatient and outpatient settings are comparable with, and sometimes exceed, physician outcomes.15 Several other studies confirmed that PAs on inpatient hospitalist services reduced length of stay, inpatient mortality, rehospitalization rates, and cost of service.24–27 These studies demonstrated that the care provided by the PA was equal or superior to teams including physician residents. A subsample from the National Ambulatory Medical Care Survey demonstrated that care provided by an NP or PA was largely comparable with that of the primary care physician in community health centers.1

Other reasons cited in the literature for physician resistance include loss of income, concerns about malpractice and legal liability, and a belief that patients would be resistant to seeing APPs.2,28,29 Physicians who support of APP practice recognize that APPs can aid in the physician shortage because APPs cover multiple patient geographic access points and facilitate in high-level triage and day/night call.8,30 These skill sets complement the team and ultimately increase revenue and patient access.

Reimbursement payment policies for APPs are also disproportionate at the national level. Insurance companies often pay APPs only a portion of what is paid to physicians for the same services. Medicare, Medicaid, and many third-party payers reimburse APPs an average of 75% to 85% of what they pay physicians for the same services.2,31-33 However, when adjusting for salary differences, this reduction in reimbursement can be misleading. According to Medical Group Management Association (MGMA) data, even when APPs bill at 85%, they could have a higher contribution margin than physicians because their base salaries are much lower than physicians'.34 A recent study found that physician-owned practices with higher APP-to-physician ratios earned $100,748 more in net income; hospital-based primary care practices earned $131,700 more.10 Multispecialty practices earned 160% more in total revenue when the ratio of APP to physicians was increased.10

Barriers to APP practice at the state level encompass differences in licensure and practice laws. Scope of practice, prescriptive authority, and collaborative practice requirements vary from state to state. This variation contributes to the reduction of patient access in many of the underserved areas and promotes APPs' migration from highly restrictive to less restrictive states.35,36 In addition, state-level reimbursement payment often depends on licensure and scope of practice requirements.37 States may limit the specialties for which direct reimbursement for APPs is allowed. They also may limit reimbursement for those who specialize in a number of different areas, such as family practice or pediatrics.38 Practice agreements/scopes of practice with attending physicians often are required for states that let APPs enroll and directly bill the Medicaid program.39 These documents outline the joint practice of an attending physician and an APP in a complementary working relationship.

Obstacles involving institutional and cultural barriers may include specific medical staff rules, regulations, and bylaws. Such restrictions include unnecessary or outdated cosignature requirements by the attending physician, restricting the evaluation of certain patient types, and/or performing certain procedures. Furthermore, although APPs have the knowledge and capability to complete tasks such as patient coordination, scheduling, and basic phone call triage, these functions should be completed by other healthcare team members such as nurses or certified medical assistants.40 Covering these tasks results in poor utilization and economic inefficiency. APPs need to be considered providers and must practice to the fullest extent of their license and education.

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The Medical University of South Carolina (MUSC) started in 1824 as a small private college for training physicians. The college expanded to become a state university with the medical center serving as a major referral center in South Carolina. To support its mission of providing excellence in patient care, teaching, and research throughout the state of South Carolina, MUSC Health needed to develop more effective and efficient utilization practices for APPs. It also was essential that APPs be incorporated as professional colleagues and considered integral members in team-based care. For this reason, an APP task force was created in 2012. At the recommendation of the task force's Subcommittee on Education, Training, and Preceptorship, MUSC Health recognized the need to appoint leaders to provide operational oversight of PAs and APRNs. This would help to bridge the gap between the APPs and MUSC senior and clinical leadership and help standardize practice. The positions of director of APRNs and director of PA practice were established and filled in May 2016. Together, these directors built a center of APP best practice to help stimulate increased recognition, better utilization, and a voice for APPs in the organization.

Initially, a consult service was developed by the directors of advanced practice, and assessments were conducted at the clinical department level. These assessments addressed utilization, billing practices, professional development, and communication among team members. Through the consult service, it was discovered that many APPs were not working at the top of their education, licensing, and experience. Many APPs were working as scribes and had taken on a number of other responsibilities that should have been delegated to other team members. In addition, the methodology of billing under the physician's National Provider Identifier (NPI) resulted in the APP becoming invisible in the abstracted data and monthly financial dashboard. Billing compliance also was a concern. A quality improvement project led by the directors of APP practice sought to develop a simplified billing algorithm that was standardized across the institution for the APPs and their attending physician partner(s).

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A standardized billing algorithm, following Medicare/Medicaid/third-party payer guidelines, needed to be developed. The primary goal of this algorithm would be to direct APPs to bill using their own NPI unless the attending physician also participated in a split/shared visit. Furthermore, there was a need to reduce compliance billing errors and eliminate confusion for patients who received bills from the attending physician although they were evaluated by an APP. Secondary goals were to help to ensure that APPs at MUSC were appropriately used to the top of their license and to reduce the number of APPs working as scribes. Finally, the algorithm would quantify the contribution of APP productivity with the development of an APP financial dashboard/scorecard. By following a standardized process, improved utilization would then be reflected in the data over time. Initial planning of the project involved developing a team and presenting evidence-based research supporting new APP billing practices to stakeholders at the medical center. The team included the directors of the APP-Best Practice Center, senior director of compliance, compliance manager, senior business analyst, and the director of the electronic medical record (EMR). A three “R” solution (rebuilding, reducing, and recreating) was proposed to simplify the APP billing algorithm: rebuilding the billing algorithm, reducing compliance errors, and recreating a financial dashboard with data capture on the back end. The APP scorecard required a rebuild with the improvement of APP reporting in the EMR.

Presentations included information about billing practices at other large academic institutions factoring in capacity costs (Table 1) to demonstrate the inefficiency of using APPs for tasks that should be fulfilled by support staff. These presentations included examples of actual return on investment for departments appropriately using their APPs. A comparison was made identifying contribution margins of APPs and physicians, factoring in salaries and the average reimbursement rate of 85% (Table 1). Additional information on the nonreimbursable component of APP practice was highlighted. These included an increase in patient access, physician availability, provider satisfaction (both attending physician and APP), patient satisfaction, and throughput.



Presentations were prepared and reported to multiple committees throughout the medical center, including hospital special operations, department administrators, EMR leadership, and senior leadership. This approach secured stakeholder buy-in, which was critical in obtaining medical center-wide support and compliance. Savings would result from increasing contribution margins due to improved patient access and promoting additional ambulatory encounters while reducing patient wait times. The new process also would increase provider satisfaction (both attending physician and APP) by allowing both provider types to work at the top of their licenses. Most importantly, it would increase patient satisfaction, as the patient would be scheduled directly with an APP or have the opportunity for a shared visit. All these factors contribute to an overall increase in downstream revenue for the medical center.

Through the work of the team, the numerous processes to bill a patient encounter were condensed into a simplified two-column billing algorithm for inpatient and outpatient visits (Figures 1 and 2).





For patient encounters provided solely by the APP, column A would be followed. APPs would bill the visit under their own NPI if the APP evaluated, diagnosed, and treated the patient. In addition, if the attending physician briefly visited the patient during the appointment but did not perform and document a portion of the physical examination and/or face-to-face medical decision-making, column A would be followed. If, however, the APP and attending physician both evaluated the patient in provider-based clinics and the attending physician performed and documented a portion of the physical examination and/or face-to-face medical decision-making, column B would be followed. This visit would be billed under the attending physician's NPI, but the APP would receive credit as the performing provider. This algorithm (column B) follows Medicare-shared guidelines.

The inpatient algorithm follows similar principles, except the APP was considered the service provider (provider who examined the patient) rather than the scheduling provider (provider in which the patient is scheduled to see in an outpatient setting) in a shared visit (column B).

Special considerations needed to be taken for procedures, admission history and physical notes, and discharge summaries to comply with the Centers for Medicare and Medicaid Services (CMS). This ensured that the documentation rules implemented complied with federal and state statutes, as well as hospital rules, regulations, and bylaws.

Certain departments were exempt from using the proposed billing algorithm. Pediatric APPs were exempt because they receive lower reimbursement rates when practicing in subspecialties. Because the ED has its own coding system, this group of APPs also was excluded during the first implementation phase.

After the algorithms were written, they were tested and retested multiple times. This involved running different scenarios to determine whether the bills were being appropriately submitted under either the APP (column A) or the attending physician (column B) and whether the APP was recognized as the author or performing provider/service provider (column B). APPs mostly billing shared visits under the attending physician were asked to follow the algorithm for 1 month. Data were compiled before and after implementation and were evaluated for inconsistencies.

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After approval was obtained from senior leadership, a plan for the educational rollout was developed. This involved providing a number of mandatory educational sessions for the APPs by the directors of advanced practice. Representatives from compliance and the EMR also were present during these sessions to answer questions. In addition to slideshow presentations, a recorded presentation narrated by the directors of advanced practice was placed in MyQuest, the campuswide learning management system that provides compliance training and learning opportunities for providers and employees. The implementation date, 2 months later, coincided with the beginning of fiscal year (FY) 2018 and a new funds flow model of compensation for the healthcare system. In this model, each department would receive payment based on the number of work relative value units (wRVUs) generated by providers in the department. wRVUs, a national standard used for measuring productivity, budgeting, allocating expenses, and cost benchmarking, are a measure of value used in the Medicare reimbursement formula for provider services. The dollar per wRVU for various subspecialties was determined using national standards (a combination of MGMA and United Health Care data) for APP and physician productivity and compensation. The goal of implementing this funds flow model was to align revenues and costs for more informed decision-making, and to create cash on hand for outreach expansion.

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Initially, compliance monitored progress of APPs using the new APP billing algorithm in multiple practice areas including inpatient and outpatient locations on a weekly basis for 6 weeks. The review of 1,183 charts was to validate both APP independent billing and shared visit charges that contained the APP as performing/service provider and the attending as the billing provider. The compliance review was agnostic to insurance carrier or clinic location (excluding the ED locations and all pediatrics).

Compliance performed audits, gave feedback to the providers, and after 5 weeks, the error rate decreased 36%. Ongoing monitoring is in place to ensure continued improvement. Inconsistencies identified in the compliance monitoring program suggested that APPs were not following outpatient/inpatient algorithms when seeing patients independently. Any deviation from the billing algorithm would not capture the APP as the performing/service provider and/or billing provider.

Inconsistencies identified by the attending providers were using incorrect attestations to the APP note as well as inconsistencies in documentation practices. This was mostly a result of the use of incorrect resident attestation verbiage or incomplete documentation of the physical examination or medical decision-making.41 Direct communications were sent via compliance to several providers to correct these errors.

After collecting 12 months' of APP wRVU data, comparisons were made with baseline wRVUs and collections for FY 2017 versus FY 2018 (Table 2). Data samples were examined from outpatient clinics in primary care, specialty medicine, and surgical teams. As suspected, the APPs' wRVUs and collections rose dramatically in all groups. This increase was statistically significant in all four groups (P < .05, CI 95%).



When focusing specifically on the general internal medicine group, the APPs' wRVUs increased by 7,745 (P = .04, CI 95%). After group adjustments for new hires, wRVUs for the APPs increased 608%. In addition, the wRVU for attending physicians in internal medicine increased 3%. For the team of APPs and attending physicians in internal medicine, the overall wRVU increased 24%. Collections also increased for both groups. Attending physicians in internal medicine had a 5% increase in collections. APP collections increased 769%; the team total for internal medicine increased 29% after adjusting for new hires (Table 2).

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Improvements as a result of this quality improvement project

As seen by these results, the new APP billing algorithm encouraged improved utilization and efficiency of the APP/physician team. Compliance errors were reduced among APPs and attending physicians. From the financial perspective, the APP billing algorithm attributed each provider's wRVU contribution to productivity. Before implementation of a standardized billing algorithm, wRVU inflation occurred for the attending physicians because APPs billed under the physicians' NPIs. However, when APPs began to bill under their own NPIs, the physicians' wRVUs continued to increase. Accurate attribution of data now can help project APP/physician staffing needs, determine clinic space needs, and calculate appropriate support staff levels. From a retention perspective, the algorithm allows a practice or department to use these data to develop potential incentive programs to reward individual high performers, APP-physician teams, and successful departments in a healthcare system. Most importantly, the APP algorithm drives increased opportunities to access care through improved work flow efficiencies.

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Revisions necessary

As expected, a number of issues needed to be addressed after implementation of the new APP billing algorithm. One concern during a shared visit was that attending physicians were not able to view their patients once the scheduling provider was changed to the APP. When the APP changed encounter provider, the patient was removed from the attending physician's schedule. To resolve this issue, the buttons in the EMR needed to be reprogrammed to reflect shared visit and APP visit. APPs would no longer need to change the scheduling provider to themselves. This let the patient remain visible on the attendings' schedules.

Another concern revolved around return communication to the referring provider after a consult was completed. If the APP was the service provider, all letters to the referring providers generated the APP's signature rather than that of the attending physician. During a shared visit, attending physicians requested that referring providers receive communication from the attending physician. Once the shared visit and APP visit button was developed, this issue resolved.

On the inpatient side, a major challenge of the algorithm occurred when the note was sent from the APP to the attending physician for cosignature. In the EMR, after the APP sent the chart to the attending for cosignature, if the attending changed the service provider field, the system would not recognize the APP as part author. In this case, the APP would not receive credit as performing provider. These vagaries of the EMR confounded the ability to capture the APP as the service provider. After testing and retesting, these variations were corrected so that the service provider field could be locked by the service provider, even when encounters required cosignature by an attending physician. To avoid this compliance error, after the APP entered her or his name in the service provider field, the field would automatically lock so that the attending physician could not change the name.

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Need for the development of a new financial dashboard

The new APP billing algorithm captures more accurate billing data to recognize APPs as performing and/or billing providers. However, a revision in the monthly APP provider financial dashboard was necessary to provide a more detailed, user-friendly APP record for APP providers and departments to access. The financial dashboard was developed by the directors of APP practice and built in Tableau Server Version 10.5.3–10500.18.0404.1406, a proprietary software used at MUSC, with the assistance from internal IT solutions consultants (Figure 3). The objective of the financial dashboard was to let providers and administrators clearly identify APP and attending physician productivity.



The financial dashboard includes revenue cycle, access (PATH), and the Clinician and Group Consumer Assessment of Healthcare Providers and Systems scores. These metrics, specific to the organization, let providers assess their productivity and patient satisfaction scores.

The revenue cycle tab attributes wRVUs by APP independent visits (APP is both the billing and performing provider) and by APP/attending physician shared visits (APP is the performing provider and the attending physician is the billing provider). Other revenue cycle metrics include monthly charge lag (number of days in which a chart is signed and closed by the billing provider), new patient billed visits, and total number of patient visits (including preoperative and postoperative). The APP and/or administrator can view current month or 13-month wRVU history, top service codes billed by the specific provider, total payer mix (breakdown of patient's insurance type), and the wRVUs generated during shared visit encounters with a particular attending physician. On the access (PATH) tab, the provider can review variables that affect access on a daily basis and compare them with the past fiscal year. Finally, the patient experience tab lets APPs review patient satisfaction scores.

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An organizational plan to standardize billing practices for APPs is necessary in today's changing healthcare environment. The plan should include developing a task force comprising APP representation, compliance, EMR/IT, and business analytics. This ensures that the standardized billing is built with checkpoints that include updated practice laws, compliance/legal standards, hospital bylaws, and the ability to extract data and reporting metrics. After a task force is in place, assessment must be made of the current state. This includes a first pass of data capture that differentiates between independent APP visits and APP/attending physician shared visits. Next, an evaluation is needed of the actions required when an APP enters a level of service (1 through 5) and visit diagnoses (ICD-10 codes). Finally, a compliance audit is needed on current documentation and billing practices for independent APP visits and APP/attending physician shared visits. When developing the APP billing algorithm, CMS guidelines must be followed. The task force should streamline steps for the APP to follow when billing an independent versus a shared visit in inpatient and outpatient settings. Billing data need to reflect independent versus shared visits. Furthermore, the shared visits should attribute the APP as performing provider and the attending physician as billing provider. The algorithm should outline proper supporting documentation to be completed by the attending physician to meet CMS guidelines.

Next, an educational rollout and go-live date need to be agreed on for key stakeholder groups, including senior leadership, department administrators, physician leaders, compliance managers, EMR educators, attending physicians, and APPs. After education is completed with a go-live date, 6-month and 1-year data reviews including wRVU and collections can be compared with data from before and after implementation of the algorithm. A data review can be run in parallel with monthly compliance audits to ensure proper algorithm use. At 1-year postimplementation, a review of the steps is necessary to refine the algorithm to simplify steps for providers and reduce errors.

As demonstrated by this quality improvement project, buy-in needs to be secured from senior leadership to review current billing practices and data output and will be the impetus to propose standardized billing for APPs. With the APP workforce growing, the implementation of EMR systems, and today's healthcare financial constraints, healthcare systems must standardize their billing practices. All professional services delivered by providers need to be accurately captured by the EMR. This ensures that all professional services delivered by APPs are attributed to the appropriate healthcare provider, despite services billed under the attending physician.42

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          advanced practice provider; billing; NP; PA; productivity; wRVUs

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